OPEC's not going away, so it may be time to start converting part of your fleet
Light- and medium-duty fleets, listen up. You need to start converting at least some of your vehicles so they can operate on alternative fuels. Now.
Most of you will probably disagree with me, and you have some pretty strong ammunition for doing so.
Truck manufacturers, by and large, aren't building production-line alternative fueled vehicles (AFVs) - at least not in significant numbers. The refueling infrastructure for any kind of alternative fuel - compressed or liquefied, propane, methanol, electricity, ethanol, you name it - doesn't exist yet. And AFVs cost anywhere from $4,000 to $10,000 more, depending on the fuel, conversion package, etc.
Finally, the track record of AFVs, at least in commercial applications, is mixed at best. The range of most alternative fuels doesn't come close to what you can get using diesel or gasoline; the extra AFV components require more investment in training courses for mechanics; and the reliability of some AFV systems has been questioned.
That evidence is hard to ignore and should be rightly flung in my face. However, I've got a one-word acronym for you to chew on: OPEC. That's right, the Organization of Petroleum Exporting Countries. There's no greater incentive for switching to alternative fuel. Look at a few facts and you'll see why.
The price of oil tripled in less than a year, and not because of any shortage or natural disaster. The 11 members of OPEC, as well as non-OPEC members Norway, Mexico, and Russia, agreed to cut back production levels by 4-million barrels a day. In effect, they engaged in price fixing. Consider further that most oil production is profitable at $7 to $8 a barrel, and you'll realize what kind of ride you're being taken for.
Right now, the U.S. is on track to import more than 60% of the oil it needs to fuel cars, trucks, and factories by the year 2010. In addition, there's the rising demand for cars and trucks in China and India, home to nearly half of the world's population. OPEC can't wait to sell them oil to run these vehicles. Will it decide there's enough to go around? Or will it tighten the world's oil tap and see who pays the most first?
Remember, too, that fuel is one of the biggest expenses a fleet has to cover, second only to employee wages and benefits. How much can you afford to pay per gallon?
By the time diesel reached $1.50/gal. last month, truckers had rallied twice in front of the nation's capital, the American Trucking Assns. had called on President Clinton to open the Strategic Petroleum Reserve, and Energy Secretary Bill Richardson had begged, pleaded, and strong-armed OPEC members to get production levels up.
So don't dismiss alternative fuels out of hand. The lion's share comes from domestic producers, especially compressed and liquefied natural gas.
Alternative fueled engines and components are improving, too. Harris Ranch, a Class 8 fleet in California, operates 12 of its trucks on a combination of LNG and diesel. The company's LNG engines saved the fleet 3 cents to 4 cents/mi. when diesel was 90 cents/gal. The trucks get almost the same power.
It wasn't cheap, though. Harris Ranch spent $2-million to build an LNG refueling station and convert its trucks. The fleet did get $900,000 in grants from various California state agencies to defray those costs. And it's looking at making its own LNG in the future, which would entitle it to a 25 cents/gal. federal tax credit.
The options are out there. If a Class 8 fleet can do it, light- and medium-duty fleets can, too. OPEC isn't going to go away, and your trucks need fuel in order to move. Either you pay now or you pay a lot more later on.